Q2 2026 Church & Dwight Co Inc Earnings Call

July 31, 2026

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the CHURCH & DWIGHT's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a Q&A session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Church & Dwight's Q2 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you. Good morning, everyone. Thanks for joining the call. We had a strong second quarter and first half, and I want to start by thanking all of our CHURCH & DWIGHT employees all around the world for executing so well in a challenging environment.

Richard Dierker: Thank you. Good morning, everyone. Thanks for joining the call. We had a strong Q2 and H1, and I want to start by thanking all of our Church & Dwight employees all around the world for executing so well in a challenging environment. I'll begin with some thoughts on the broader environment and then a review of our Q2 results, and then I'll turn the call over to Lee McChesney, our CFO, and when Lee is done, we'll open it up for questions. Starting with the broader environment, conditions remain dynamic. However, our categories are growing ahead of our original expectations, and Church & Dwight is growing even faster. Consumer spending remains resilient. Our teams are executing with excellence, and we remain focused on offering high-quality, solution-oriented products to consumers at the right value.

Rick Dierker: Thank you. Good morning, everyone. Thanks for joining the call. We had a strong Q2 and H1, and I want to start by thanking all of our Church & Dwight employees all around the world for executing so well in a challenging environment. I'll begin with some thoughts on the broader environment and then a review of our Q2 results, and then I'll turn the call over to Lee McChesney, our CFO, and when Lee is done, we'll open it up for questions. Starting with the broader environment, conditions remain dynamic. However, our categories are growing ahead of our original expectations, and Church & Dwight is growing even faster. Consumer spending remains resilient. Our teams are executing with excellence, and we remain focused on offering high-quality, solution-oriented products to consumers at the right value.

Speaker #2: I'll begin with some thoughts in the broader environment, and then a review of our Q2 results, and then I'll turn the call over to Lee McChesney, our CFO, and when Lee is done, we'll open it up for questions.

Speaker #2: Starting with the broader environment: conditions remain dynamic; however, our categories are growing ahead of our original expectations, and Church & Dwight is growing even faster.

Speaker #2: Consumer spending remains resilient. Our teams are executing with excellence, and we remain focused on offering high-quality, solution-oriented products to consumers the right value. Our brands continue to perform exceptionally well, driving a second straight quarter of industry-leading organic sales growth.

Richard Dierker: Our brands continue to perform exceptionally well, driving a second straight quarter of industry-leading organic sales growth. Turning to the quarter, net sales increased 1.6%, which was ahead of our outlook. Organic sales grew 5.8%, almost six, well above our 3% outlook. This growth was broad-based across all three divisions and was primarily driven by volume growth of 4.3% and positive price mix of 1.5%. Adjusted gross margin was 45.4%, up 40 basis points, and adjusted EPS was $0.89 above our $0.88 outlook. Overall, this is a great result, and with the H1 of the year behind us, it gives us great confidence to raise our sales, EPS, and cash flow outlook for the full year. In Q2, we also completed the acquisition of the fast-growing Miss Mouth brand, the number one stain remover brand on Amazon.

Rick Dierker: Our brands continue to perform exceptionally well, driving a second straight quarter of industry-leading organic sales growth. Turning to the quarter, net sales increased 1.6%, which was ahead of our outlook. Organic sales grew 5.8%, almost six, well above our 3% outlook. This growth was broad-based across all three divisions and was primarily driven by volume growth of 4.3% and positive price mix of 1.5%. Adjusted gross margin was 45.4%, up 40 basis points, and adjusted EPS was $0.89 above our $0.88 outlook. Overall, this is a great result, and with the H1 of the year behind us, it gives us great confidence to raise our sales, EPS, and cash flow outlook for the full year. In Q2, we also completed the acquisition of the fast-growing Miss Mouth brand, the number one stain remover brand on Amazon.

Speaker #2: Turning to the quarter: net sales increased 1.6%, which was ahead of our outlook, and organic sales grew 5.8%—almost 6%—well above our 3% outlook.

Speaker #2: This growth was broad-based across all three divisions and was primarily driven by volume growth of 4.3% and a positive price mix of 1.5%. Adjusted gross margin was 45.4%, up 40 basis points, and adjusted EPS was $0.89, above our $0.88 outlook.

Speaker #2: Overall, this is a great result, and with the first half of the year behind us, it gives us great confidence to raise our sales, EPS, and cash flow outlook for the full year.

Speaker #2: In Q2, we also completed the acquisition of the fast-growing Mismooth brand, the number-one stain remover brand on Amazon. We are encouraged by the strong initial sales results from the brand since the June acquisition.

Richard Dierker: We're encouraged by the strong initial sales results from the brand since the June acquisition, and I'm especially excited about the growth opportunities for Miss Mouth over the next 12 to 18 months. In the Q2, Miss Mouth's consumption grew over 50% and gained almost three and a half share points. We think this is just the beginning, as household penetration for the brand is currently just 2.5% compared to the category, which is 50%. Additionally, ACV for Miss Mouth is only 35%, compared to 80% for the category, which again indicates plenty of room to run on distribution. Innovation and distribution gains remain a significant competitive advantage for Church & Dwight. They were a major contributor to our industry-leading growth. We're confident that our relentless focus on innovation will continue to drive strong growth, distribution gains at shelf, and market share expansion.

Rick Dierker: We're encouraged by the strong initial sales results from the brand since the June acquisition, and I'm especially excited about the growth opportunities for Miss Mouth over the next 12 to 18 months. In the Q2, Miss Mouth's consumption grew over 50% and gained almost three and a half share points. We think this is just the beginning, as household penetration for the brand is currently just 2.5% compared to the category, which is 50%. Additionally, ACV for Miss Mouth is only 35%, compared to 80% for the category, which again indicates plenty of room to run on distribution. Innovation and distribution gains remain a significant competitive advantage for Church & Dwight. They were a major contributor to our industry-leading growth. We're confident that our relentless focus on innovation will continue to drive strong growth, distribution gains at shelf, and market share expansion.

Speaker #2: And I'm especially excited about the growth opportunities for Mismouth over the next 12 to 18 months. In the second quarter, Mismouth's consumption grew over 50%, and gained almost 3.5 share points.

Speaker #2: And we think this is just the beginning, as household penetration for the brand is currently just 2.5%, compared to the category, which is 50%.

Speaker #2: Additionally, ACV for mismouth is only 35%, compared to 80% for the category, which, again, indicates plenty of room to run on distribution. Innovation and distribution gains remain a significant competitive advantage for CHURCH & DWIGHT.

Speaker #2: They were a major contributor to our industry-leading growth. We're confident that our relentless focus on innovation will continue to drive strong growth, distribution gains itself, and market share expansion.

Speaker #2: New product launches this year are expected to account for about half of our organic growth, as we innovate in key categories across the portfolio.

Richard Dierker: New product launches this year are expected to account for about half of our organic growth as we innovate in key categories across the portfolio. Consumption across our largest categories grew at 2.7% in Q2, which exceeded our category growth expectations of around 2%. I'm going to turn my comments to each of the three divisions. First up is the US business. Domestic organic sales increased 5.1%, with sustained growth in both of our household and personal care portfolios. Growth was driven by volume and favorable price mix with strong performance from TheraBreath mouthwash and toothpaste, Hero, Arm & Hammer cat litter, and Zicam. The Arm & Hammer brand had another quarter of growth, with laundry maintaining record shares across total laundry.

Rick Dierker: New product launches this year are expected to account for about half of our organic growth as we innovate in key categories across the portfolio. Consumption across our largest categories grew at 2.7% in Q2, which exceeded our category growth expectations of around 2%. I'm going to turn my comments to each of the three divisions. First up is the US business. Domestic organic sales increased 5.1%, with sustained growth in both of our household and personal care portfolios. Growth was driven by volume and favorable price mix with strong performance from TheraBreath mouthwash and toothpaste, Hero, Arm & Hammer cat litter, and Zicam. The Arm & Hammer brand had another quarter of growth, with laundry maintaining record shares across total laundry.

Speaker #2: Consumption across our larger categories grew at 2.7% in the second quarter, which exceeded our category growth expectations of around 2%. Now I'm going to turn my comments to each of the three divisions.

Speaker #2: First up is the U.S. business. Domestic organic sales increased 5.1%, with sustained growth in both our household and personal care portfolios. Growth was driven by volume and favorable price mix, with strong performance from TheraBreath mouthwash and toothpaste, HERO, Arm & Hammer cat litter, and Zicam.

Speaker #2: The Arm & Hammer brand had another quarter of growth, with laundry maintaining record shares across total laundry. Arm & Hammer laundry detergent consumption in category consumption grew about 1% in the quarter.

Richard Dierker: Arm & Hammer laundry detergent consumption and category consumption grew about 1% in the quarter, despite a step-up in competitor promotions and a lower level for Arm & Hammer. The value segment of laundry continues to grow. Next up is litter. Continued fantastic results as Arm & Hammer cat litter consumption grew a robust 7.5%, and share increased 0.8 points to reach 24.5. While category promotional levels declined slightly, they remain at historically high levels. Arm & Hammer cat litter launched Dual Defense with Microban clumping litter earlier this year, and that launch continues to do very well. Hero and TheraBreath continue to contribute considerably to overall performance. TheraBreath achieved another quarter of record share gains, jumping 4.5 points to 25.3% share and further solidified our number 2 position in total mouthwash.

Rick Dierker: Arm & Hammer laundry detergent consumption and category consumption grew about 1% in the quarter, despite a step-up in competitor promotions and a lower level for Arm & Hammer. The value segment of laundry continues to grow. Next up is litter. Continued fantastic results as Arm & Hammer cat litter consumption grew a robust 7.5%, and share increased 0.8 points to reach 24.5. While category promotional levels declined slightly, they remain at historically high levels. Arm & Hammer cat litter launched Dual Defense with Microban clumping litter earlier this year, and that launch continues to do very well. Hero and TheraBreath continue to contribute considerably to overall performance. TheraBreath achieved another quarter of record share gains, jumping 4.5 points to 25.3% share and further solidified our number 2 position in total mouthwash.

Speaker #2: Despite a step-up in competitive promotions, and a lower level for Arm & Hammer, the value segment of laundry continues to grow. Next up is litter.

Speaker #2: Continued fantastic results as Arm & Hammer cat litter consumption grew a robust 7.5%. And share increased 0.8 points to reach 24.5. While category promotional levels declined slightly, they remained at historically high levels.

Speaker #2: Arm & Hammer cat litter launched Dual Defense with MicroBond, clumping litter, earlier this year, and that launch continues to do very well. HERO and TheraBreath continue to contribute considerably to overall performance.

Speaker #2: TheraBreath achieved another quarter of record share gains, jumping 4.5 points to 25.3% share, and further solidified our number-2 position in total mouthwash. Even with that growth, household penetration remains relatively low at only 14%, compared to the mouthwash category, of 65%.

Richard Dierker: Even with that growth, household penetration remains relatively low at only 14%, compared to the mouthwash category of 65%. Our TheraBreath toothpaste launch continues to perform well, and it's still early in the launch. It's off to a great start with a 1-point share in total toothpaste, despite only just fully entering brick-and-mortar in the last several months. Hero consumption outpaced the patch category, and with the cleanser launch just starting now, we're confident in Hero continuing to gain share in total acne. Our facial cleansers represent a $650 million category and accounts for approximately 30% of the total acne category. Lots of runway as Hero has, again, relatively low household penetration at 10%, compared to the category of 30%, which gives us confidence in the continued growth of this brand.

Rick Dierker: Even with that growth, household penetration remains relatively low at only 14%, compared to the mouthwash category of 65%. Our TheraBreath toothpaste launch continues to perform well, and it's still early in the launch. It's off to a great start with a 1-point share in total toothpaste, despite only just fully entering brick-and-mortar in the last several months. Hero consumption outpaced the patch category, and with the cleanser launch just starting now, we're confident in Hero continuing to gain share in total acne. Our facial cleansers represent a $650 million category and accounts for approximately 30% of the total acne category. Lots of runway as Hero has, again, relatively low household penetration at 10%, compared to the category of 30%, which gives us confidence in the continued growth of this brand.

Speaker #2: Our TheraBreath toothpaste launch continues to perform well, and it's still early in the launch. It's off to a great start, with a 1.0 share in total toothpaste, despite only just fully entering brick-and-mortar in the last several months.

Speaker #2: HERO consumption outpaced the patch category, and with the cleanser launch just starting now, we're confident in HERO continuing to gain share in total acne.

Speaker #2: Facial cleansers represent a $650 million category and account for approximately 30% of the total acne category. There's a lot of runway, as HERO again has relatively low household penetration at 10%, compared to the category's 30%, which gives us confidence in the continued growth of this brand.

Speaker #2: For Touchland, sales grew in the second quarter, and with back half-weighted innovation, new collaborations, and activations, we expect continued sales growth in the second half of the year.

Richard Dierker: For Touchland, sales grew in Q2, and with H2 weighted innovation, new collaborations, and activations, we expect continued sales growth in H2 of the year. Looking forward further, our international expansion, our innovation into new categories, and future distribution opportunities continue to give us confidence in this brand as we look to 2027. Global e-com was once again a strong contributor. Global e-commerce grew 22.7% in Q2, and global online sales now represent 25.5% of total consumer. Turning to international, Q2 is another great success, with our international business delivering organic sales growth of 9.1%, driven by higher volume and favorable price mix. Our great international brands are leading to share gains and growth that outpace local countries' GDP.

Rick Dierker: For Touchland, sales grew in Q2, and with H2 weighted innovation, new collaborations, and activations, we expect continued sales growth in H2 of the year. Looking forward further, our international expansion, our innovation into new categories, and future distribution opportunities continue to give us confidence in this brand as we look to 2027. Global e-com was once again a strong contributor. Global e-commerce grew 22.7% in Q2, and global online sales now represent 25.5% of total consumer. Turning to international, Q2 is another great success, with our international business delivering organic sales growth of 9.1%, driven by higher volume and favorable price mix. Our great international brands are leading to share gains and growth that outpace local countries' GDP.

Speaker #2: Looking forward further, our international expansion, our innovation into new categories, and future distribution opportunities continue to give us confidence in this brand as we look to 2027.

Speaker #2: Global e-commerce was once again a strong contributor. Global e-commerce grew 22.7% in the second quarter, and global online sales now represent 25.5% of total consumer sales.

Speaker #2: Turning to international, Q2 is another great success, with our international business delivering organic sales growth of 9.1%, driven by higher volume and favorable price mix.

Speaker #2: Our great international brands are leading to share gains and growth that outpaced local countries' GDP. In addition, our recent U.S. acquisitions are paying dividends across the world in a big way, where brands like HERO and TheraBreath are driving outsized growth.

Richard Dierker: In addition, our recent US acquisitions are paying dividends across the world in a big way, where brands like Hero and TheraBreath are driving outsized growth. Our ability to scale brands to so many countries so quickly is getting better and better. Overall, our international team is executing very well. Our specialty products division also performed well. We're getting sales growth of 2.8% due to a combination of higher volume and higher price and product mix. I'll close by saying that we were very pleased with the great H1. The benefits of our strategic actions in 2025 are enabling greater focus on our growth initiatives. I am especially pleased with the time the entire organization is spending focused here on the future. Momentum is building.

Rick Dierker: In addition, our recent US acquisitions are paying dividends across the world in a big way, where brands like Hero and TheraBreath are driving outsized growth. Our ability to scale brands to so many countries so quickly is getting better and better. Overall, our international team is executing very well. Our specialty products division also performed well. We're getting sales growth of 2.8% due to a combination of higher volume and higher price and product mix. I'll close by saying that we were very pleased with the great H1. The benefits of our strategic actions in 2025 are enabling greater focus on our growth initiatives. I am especially pleased with the time the entire organization is spending focused here on the future. Momentum is building.

Speaker #2: Our ability to scale brands to so many countries so quickly is getting better and better. Overall, our international team is executing very well. Our Specialty Products division also performed well, with sales growth of 2.8% due to a combination of higher volume, higher price, and product mix.

Speaker #2: I'll close by saying that we were very pleased with the great first half. The benefits of our strategic actions in 2025 are enabling greater focus on our growth initiatives.

Speaker #2: I am especially pleased with the time the entire organization is spending focused here, on the future. Momentum is building. The category work surrounding Arm & Hammer, our acceleration plans for oral care behind TheraBreath, and the pipeline for M&A within the international business are just a few examples.

Richard Dierker: The category work surrounding Arm & Hammer, our acceleration plans for oral care behind TheraBreath, and the pipeline for M&A within the international business are just a few examples. I'll provide a detailed update in early 2027, but I will say I'm more optimistic about the future than I've ever been. I'm also very proud of our Church & Dwight team as we continue to execute well in a volatile environment. With that, I'll turn the call over to Lee for more detail on the quarter.

Rick Dierker: The category work surrounding Arm & Hammer, our acceleration plans for oral care behind TheraBreath, and the pipeline for M&A within the international business are just a few examples. I'll provide a detailed update in early 2027, but I will say I'm more optimistic about the future than I've ever been. I'm also very proud of our Church & Dwight team as we continue to execute well in a volatile environment. With that, I'll turn the call over to Lee for more detail on the quarter.

Speaker #2: I'll provide a detailed update in early 2027, but I will say I'm more optimistic about the future than I've ever been.

Speaker #2: I'm also very proud of our CHURCH & DWIGHT team as we continue to execute well in a volatile environment. And with that, I'll turn the call over to Lee for more detail in the quarter.

Speaker #1: Thank you, Rick, and good day, everyone. We appreciate you joining the call. As we now enter the second half of the year, we are encouraged with the results fueled by innovation and share growth, which provides us the momentum to deliver strong CHURCH & DWIGHT evergreen model results.

Lee McChesney: Thank you, Rick, and good day, everyone. We appreciate you joining the call. As we now enter the H2 of the year, we are encouraged with the results fueled by innovation and share growth, which provides us the momentum to deliver strong Church & Dwight evergreen model results. The Q2 demonstrates the strength of our portfolio of categories, our leading levels of innovation, and the execution capabilities of our teams around the globe. Similar to Rick, I also want to recognize our teams across the globe for their focus and execution this past quarter. Very well done. Let's get into the details. We'll start with EPS. Q2 EPS, adjusted EPS, was $0.89, exceeding our outlook of $0.88. Stronger than expected sales and continued gross margin improvement fueled our results and enabled increased investments in our brands.

Speaker #1: The second quarter demonstrates the strength of our portfolio of categories, our leading levels of innovation, and the execution capabilities of our teams around the globe.

Speaker #1: Similar to Rick, I also want to recognize our teams across the globe for their focus and execution this past quarter. Very well done. Let's get into the details.

Speaker #1: We'll start with EPS, second quarter EPS, adjusted EPS was 89 cents. Exceeding our outlook of 88 cents. Stronger than expected. Sales and continued gross margin improvement fueled our results.

Speaker #1: And enabled increased investments in our brands. Organic sales in the second quarter grew 5.8%, well above our outlook of approximately 3%. Growth was broad-based across the business and primarily volume-driven, with volume growth of 4.3% and positive pricing and mix of 1.5%.

Lee McChesney: Organic sales in the Q2 grew 5.8%, well above our outlook of approximately 3%. Growth was broad-based across the business and primarily volume driven, with volume growth of 4.3% and positive pricing and mix of 1.5%. Our power brands once again gained share, fueled by well-received innovation and our robust distribution wins with our commercial partners. Strong organic growth and the contributions from our acquisitions more than offset the impact of our 2025 business exits and led to reported net sales growth of a positive 1.6% in the quarter, ahead of our expectations. Let's now turn to gross margin. Our Q2 adjusted gross margin was 45.4%, an increase of 40 basis points versus last year.

Speaker #1: Our power brands once again gained share, fueled by well-received innovation and robust distribution wins with our commercial partners. Stronger organic growth and the contributions from our acquisitions more than offset the impact of our 2025 business exits and led to reported net sales growth of a positive 1.6% in the quarter, ahead of our expectations.

Speaker #1: Let's now turn to gross margin. Our second quarter adjusted gross margin was 45.4%, an increase of 40 basis points versus last year. Our results were driven by 150 basis points from productivity programs, 110 basis points from our higher-margin acquisitions, combined with the impact of our successful portfolio actions, and 180 basis points from the combination of volume, price, and mix.

Lee McChesney: Our results were driven by 150 basis points from productivity programs, 110 basis points from our higher-margin acquisitions, combined with the impact of our successful portfolio actions, and 180 basis points from the combination of volume, price, and mix. These factors offset the headwinds from inflation, tariffs, and transportation of 400 basis points. We continued to invest in our brands in Q2, as marketing expense was $165 million, up $8.2 million or 40 basis points versus last year. Similar to our strategy in past quarters, when our sales and gross margin results exceed our original expectations, we will utilize those opportunities to invest in our brands. Adjusted SG&A was $241.4 million, or 15.8% of net sales, a 220 basis point increase versus the prior year.

Speaker #1: These factors offset the headwinds from inflation, tariffs, and transportation by 400 basis points. We continue to invest in our brands in the second quarter, as marketing expense was $165 million, up $8.2 million, or 40 basis points, versus last year.

Speaker #1: And similar to our strategy in past quarters, when our sales and gross margin results exceed our original expectations, we will utilize those opportunities to invest in our brands.

Speaker #1: Adjusted SG&A was $241.4 million, or 15.8% of net sales, a 220 basis point increase versus the prior year. As we've noted in our 2026 outlooks, SG&A in the first half of the year is primarily growing due to the inclusion of Touchland's SG&A and amortization expense.

Lee McChesney: As we've noted in our 2026 outlooks, SG&A in H1 is primarily growing to the inclusion of Touchland's SG&A and amortization expense. Adjusted other expense increased by $9.2 million due to the lower interest income compared to last year. Let's now turn to cash flow. Cash flow remains a significant strength of the company, and for this H1 2026, cash from operations was $462 million, an increase of 10.8% versus the prior year, as we delivered improved cash earnings and executed disciplined working capital results. Capital expenditures were $61.8 million in H1, and we continue to expect full-year capital expenditures of approximately $130 million or roughly 2% of sales. Let's now turn our outlook to the outlook for 2026.

Speaker #1: Adjusted other expense increased by 9.2 million, due to the lower interest income compared to last year. Let's now turn to cash flow. Cash flow remains a significant strength of the company, and for this first six months of 2026, cash from operations was 462 million, an increase of 10.8% versus the prior year, as we delivered improved cash earnings and executed disciplined working capital results.

Speaker #1: Capital expenditures were 61.8 million in the first half, and we continue to expect full-year capital expenditures of approximately 130 million or roughly 2% of sales.

Speaker #1: Let's now turn our outlook to the outlook for 2026. And as detailed in our press release this morning, we are increasing our sales earnings per share and cash flow outlook despite the challenging macro environment.

Lee McChesney: As detailed in our press release this morning, we are increasing our sales, earnings per share, and cash flow outlook despite the challenging macro environment. This improvement reflects the strength of our operating fundamentals, which is led by volume-based organic growth, steady market share gains, and management's focus on gross margin expansion. Our outlook continues to reflect the impact of transitory cost pressures that developed over the past 100 days. Our latest outlook of approximately $30 million reflects raw materials, transportation costs, and various premiums resulting from the conflict in the Middle East. This outlook assumes a crude oil price of approximately $98 a barrel. Our teams have acted to fully mitigate this headwind this year through increased productivity. Separately, on a positive note, we expect to receive approximately $15 million of phase two tariff refund benefits during H2 2026.

Speaker #1: This improvement reflects the strength of our operating fundamentals, which is led by volume-based organic growth, steady market share gains, and management's focus on gross margin expansion.

Speaker #1: Our outlook continues to reflect the impact of transitory cost pressures that developed over the past 100 days. Our latest outlook of approximately $30 million reflects raw materials, transportation costs, and various premiums resulting from the conflict in the Middle East.

Speaker #1: And this outlook assumes a crude oil price of approximately $98 a barrel. Our teams have acted to fully mitigate this headwind this year through increased productivity.

Speaker #1: And separately, on a positive note, we expect to receive approximately 15 million dollars of phase two tariff refund benefits during the second half of 2026.

Speaker #1: We will invest these proceeds primarily in customer and consumer-facing business activities. We are raising our full-year organic sales outlook to approximately 4% to 5%, up from the prior outlook of 3% to 4%.

Lee McChesney: We will invest these proceeds in primarily consumer-facing business activities. We are raising our full-year organic sales outlook to approximately 4% to 5%, up from the prior outlook of 3% to 4%. The improved outlook reflects the strong H1 execution and the continued momentum across the portfolio during H2 2026. We now expect adjusted gross margin expansion of approximately 100 to 120 basis points for the year. Marketing investments is now expected to be at or above 11% of sales as we invest behind our brands and continue supporting our growth initiatives. We are raising our adjusted EPS outlook to a growth rate of 6% to 8%, versus our prior expectation of 5% to 8%. We also now expect cash from operations of approximately $1.175 billion, up from $1.15 billion.

Speaker #1: The improved outlook reflects the strong first half execution and the continued momentum across the portfolio during the second half of 2026. And we now expect to adjust gross margin, expansion of approximately 100 to 120 basis points for the year.

Speaker #1: And marketing investments is now expected to be at or above 11% of sales as we invest behind our brands and continue supporting our growth initiatives.

Speaker #1: We are raising our adjusted EPS outlook to a growth rate of 6% to 8% versus our prior expectation of 5% to 8%. And we also now expect cash from operations of approximately $1.17 to $1.175 billion, up from $1.15 billion.

Speaker #1: And turning to the third quarter, we expect organic growth sales growth of approximately 3%, and an adjusted EPS of approximately 89 cents per share, representing approximately 10% growth versus the prior year, while we also invest at approximately 12% rate of marketing as a percentage of sales.

Lee McChesney: Turning to Q3, we expect organic sales growth of approximately 3% and an adjusted EPS of approximately $0.89 per share, representing approximately 10% growth versus the prior year, while we also invested approximately 12% rate of marketing as a percentage of sales. To conclude, we are very pleased with our H1 performance and are confident in our ability to deliver our improved outlook for the balance of 2026. Our portfolio remains strong. Our brands continue to gain share, and our teams are executing well in a dynamic environment. Operator, we are now ready for questions.

Speaker #1: So, to conclude, we are very pleased with our first half performance and are confident in our ability to deliver our improved outlook for the balance of 2026.

Speaker #1: Our portfolio remains strong, our brands continue to gain share, and our teams are executing well in a dynamic environment. Operator, we are now ready for questions.

Speaker #2: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand.

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your headset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Rupesh Parikh with Oppenheimer. Your line is open. Please go ahead.

Speaker #2: To withdraw your question, press star one again. We ask that you pick up your headset when asking a question to allow for optimum sound quality.

Speaker #2: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Rupesh Parikh with Oppenheimer.

Speaker #2: Your line is open. Please go ahead.

Speaker #1: Good morning, and thanks for taking my question. Also, congrats on a nice quarter. So, just going back to the organic sales growth delivery for the quarter, I'm just curious—at a high level, what are some of the areas that drove the significant upside that we saw on that line item?

Rupesh Parikh: Good morning, thanks for taking my question. Also, congrats on a nice quarter. Just going back to the organic sales growth delivery for the quarter. Just curious, at a high level, what are some of the areas that drove the significant upside that we saw on that line item?

Speaker #3: Yeah. No, thanks, Rupesh. You know, the good news is it was pretty broad-based, but as we said in the release, I think air breath, cat litter, you know, I would say Arm and Hammer Laundry was kind of flattish.

Richard Dierker: No, thanks, Rupesh. The good news is it was pretty broad-based, but as we said in the release, I think TheraBreath, cat litter, I'd say Arm & Hammer laundry was kind of flattish. Anything else you would add, Lee?

Rick Dierker: No, thanks, Rupesh. The good news is it was pretty broad-based, but as we said in the release, I think TheraBreath, cat litter, I'd say Arm & Hammer laundry was kind of flattish. Anything else you would add, Lee?

Speaker #3: Anything else you would add, Lee?

Speaker #1: Sure. I think as Rick said, it's pretty broad-based. Home care, personal care, across the globe. I mean, really good to see international at 9% as well, and that was pretty broad-based across both Europe and Asia, and Latin America as well.

Lee McChesney: I think as Rick said, it's pretty broad-based. Home care, personal care across the globe, and really good to see international at 9% as well, and that was pretty broad-based across both Europe, Asia, and Latin America as well.

Speaker #4: Okay, great. And then my follow-up question, just on the mis-malf acquisition, it sounds like very strong consumption that you guys are seeing right now.

Rupesh Parikh: Okay, great. My follow-up question, just on the Miss Mouth acquisition. It sounds like very strong consumption that you guys are seeing right now. As we look out the next couple of years, I know you guys talked about this business growing double digits, is there any more granularity you can give in terms of the types of growth rates you expect for the business?

Speaker #4: But as we look out the next couple of years, is I know you guys talked about this business growing double digits, but is there any more granularity you can give in terms of the types of growth rates you expect for the business?

Speaker #3: Yeah, I think it's a little early to do that. I mean, we just bought it in June—early June. I would say a lot of work is going on to integrate and then accelerate this business.

Richard Dierker: Yeah, I think it's a little early to do that. We just bought it in early June. I would say a lot of work is going on to integrate and then accelerate this business, and I don't think we've been more excited about an acquisition in a long time. There are five individuals that came over. They've tucked right into our Fabric Care business. We know Fabric Care really, really well. Retailers, our internal sales force are clamoring for this brand. It's already at a 13 share at a major retailer, and it's only been in there for a few months, as one example. I'd just go back to household penetration's three. It's 50 for the category. Probably the right time to talk about our North Star on growth ambitions is probably early 2027, we think there's a lot of enthusiasm around Miss Mouth.

Rick Dierker: Yeah, I think it's a little early to do that. We just bought it in early June. I would say a lot of work is going on to integrate and then accelerate this business, and I don't think we've been more excited about an acquisition in a long time. There are five individuals that came over. They've tucked right into our Fabric Care business. We know Fabric Care really, really well. Retailers, our internal sales force are clamoring for this brand. It's already at a 13 share at a major retailer, and it's only been in there for a few months, as one example. I'd just go back to household penetration's three. It's 50 for the category. Probably the right time to talk about our North Star on growth ambitions is probably early 2027, we think there's a lot of enthusiasm around Miss Mouth.

Speaker #3: And I don't think we've been more excited about an acquisition in a long time. There's, you know, five individuals that came over. They've, you know, talked right into our fabric, our business.

Speaker #3: We know fabric here really, really well. And retailers are internal sales force are clamoring for this brand. And so it's already at a 13 share at a major retailer, and it's only been in there for a few months as one example.

Speaker #3: But I just go back to household penetration—it's 3%. It's 50% for the category. Probably the right time to talk about our North Star on growth ambitions is early 2027, but we think there's a lot of enthusiasm around mis-malf.

Speaker #4: Great. Thank you, Apostolon.

Rupesh Parikh: Great. Thank you. I'll pass it along.

Speaker #2: Your next question comes from the line of Anna Lazul with Bank of America. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Anna Lizzul with Bank of America. Your line is open. Please go ahead.

Speaker #5: Hi, good morning. Thank you so much for the question. I was wondering if you could comment on the success you're seeing across Arm & Hammer Laundry.

Anna Lizzul: Hi, good morning. Thank you so much for the question. I was wondering if you could comment on the success you're seeing across Arm & Hammer laundry. Wanted to follow up on the fact that you mentioned in the beginning of this year where you surpassed Tide Original on wash load volumes. Where are you seeing now the share gains for Arm & Hammer across the value, mid-tier, and premium tiers? Then on the premium side for the brand, you touched on Touchland earlier in the call and the expansion to toothpaste with the rollout. Wanted to see how you're thinking about this expansion as we move forward this year. Thank you.

Speaker #5: I wanted to follow up on the fact that you mentioned at the beginning of this year, where you surpassed Tide Original on wash load volumes. Where are you now seeing the share gains for Arm & Hammer across the value, mid-tier, and premium tiers?

Speaker #5: And then on the premium side for the brands, you touched on Touchland earlier in the call and the expansion to toothpaste with the rollout.

Speaker #5: Wanted to see how you're thinking about this expansion as we move forward this year. Thank you.

Speaker #3: Yeah. And on your second one, are you talking about the Air Breath, or are you talking about Touchland?

Richard Dierker: Yeah. On your second one, are you talking about TheraBreath, or are you talking about Touchland?

Rick Dierker: Yeah. On your second one, are you talking about TheraBreath, or are you talking about Touchland?

Speaker #5: Oh, sorry. The Air Breath. You're right.

Anna Lizzul: Oh, sorry, TheraBreath. You're right.

Speaker #3: Yeah. Yeah. Okay. Well, on laundry, look, laundry in general, the good news or really the great news is despite a significant increase in promotion, I'd say we're back to historical levels of promotion in laundry.

Richard Dierker: Well, on laundry, look, laundry in general, the good news or really the great news is, despite a significant increase in promotion, I'd say we're back to historical levels of promotion in laundry. The category was up 200 basis points. Henkel was up 1,100 basis points, and Procter was up almost 200 basis points as well. Church & Dwight was down 300 basis points on promotion. Despite that, the value segment grew, and we maintained our share. Just the world we live in these days, Arm & Hammer is just so well-positioned for growth. Now, there's a lot of couponing that happens off the channel as well, and our competitors are spending on couponing, of course, as well. Arm & Hammer, to hold share in an environment like that is fantastic.

Rick Dierker: Well, on laundry, look, laundry in general, the good news or really the great news is, despite a significant increase in promotion, I'd say we're back to historical levels of promotion in laundry. The category was up 200 basis points. Henkel was up 1,100 basis points, and Procter was up almost 200 basis points as well. Church & Dwight was down 300 basis points on promotion. Despite that, the value segment grew, and we maintained our share. Just the world we live in these days, Arm & Hammer is just so well-positioned for growth. Now, there's a lot of couponing that happens off the channel as well, and our competitors are spending on couponing, of course, as well. Arm & Hammer, to hold share in an environment like that is fantastic.

Speaker #3: The category was up 200 basis points. Henkel was up 1,100 basis points, and Procter was up almost 200 basis points as well. Church & Dwight was down 300 basis points.

Speaker #3: On promotion. And so despite that, the value segment grew, and we maintained our share. So, you know, just the world we live in these days, Arm & Hammer is just so well positioned for growth.

Speaker #3: Now, there's a lot of couponing that happens off-channel as well. And our competitors are spending on couponing, of course, as well.

Speaker #3: So Arm and Hammer to hold share in an environment like that is fantastic. We over time will make sure that we're a historical levels of promotion as well.

Richard Dierker: We, over time, will make sure that we're at historical levels of promotion as well. A lot of optimism on Arm & Hammer laundry, especially behind our innovations. We have a good, better, best strategy, and I'd say each of those peers within laundry are doing well. Even our sheets, as Tide evo launches and takes shelf space and money behind it, we're the number 2 player in the sheets space. Our sheets are up 30% as well, and we're going along for the ride, which is great. That's on Arm & Hammer laundry. On TheraBreath, I would say, again, number 2 mouthwash, lots of runway. Consumption grew 20% plus. We grew four and a half share points to 25%. We're less than 1,000 basis points from the market leader, who's Listerine. Our household penetration's still relatively low at 14 compared to the category at 65.

Rick Dierker: We, over time, will make sure that we're at historical levels of promotion as well. A lot of optimism on Arm & Hammer laundry, especially behind our innovations. We have a good, better, best strategy, and I'd say each of those peers within laundry are doing well. Even our sheets, as Tide evo launches and takes shelf space and money behind it, we're the number 2 player in the sheets space. Our sheets are up 30% as well, and we're going along for the ride, which is great. That's on Arm & Hammer laundry. On TheraBreath, I would say, again, number 2 mouthwash, lots of runway. Consumption grew 20% plus. We grew four and a half share points to 25%. We're less than 1,000 basis points from the market leader, who's Listerine. Our household penetration's still relatively low at 14 compared to the category at 65.

Speaker #3: So a lot of optimism on Arm & Hammer Laundry, especially behind our innovations. We have a good-better-best strategy, and I'd say each of those tiers within laundry are doing well.

Speaker #3: Even our sheets—you know, as Tide Evo launches and takes shelf space and money behind it, we're the number two player in the sheet space.

Speaker #3: So our sheets are up 30% as well, and we're going along for the ride, which is great. So that's on Arm & Hammer Laundry. On the Air Breath side, I would say, again, number two mouthwash—lots of runway. Consumption grew 20% plus.

Speaker #3: We grew 4.5 share points to 25%. We're less than 1,000 basis points from the market leader, which is Listerine. Our household penetration is still relatively low at 14%, compared to the category at 65%.

Speaker #3: That is enabling us to go into other parts of oral care, like toothpaste. Like, we never deserved the space that we got for the air breath toothpaste, but because of the success of the mouthwash, we got some premium great shelf space.

Richard Dierker: That is enabling us to go into other parts of oral care, like toothpaste. We never deserved the space that we got for TheraBreath toothpaste. Because of the success of the mouthwash, we got some premium, great shelf space. As a result, we have a great brand with a great value proposition on fresh breath and cleaning, and it's doing extremely well, and it's already at a 1 share point. I couldn't be more optimistic about our oral care franchise behind TheraBreath.

Rick Dierker: That is enabling us to go into other parts of oral care, like toothpaste. We never deserved the space that we got for TheraBreath toothpaste. Because of the success of the mouthwash, we got some premium, great shelf space. As a result, we have a great brand with a great value proposition on fresh breath and cleaning, and it's doing extremely well, and it's already at a 1 share point. I couldn't be more optimistic about our oral care franchise behind TheraBreath.

Speaker #3: And as a result, we have a great brand with a great value proposition on fresh breath and cleaning. And it's doing extremely well. And it's already at a 1 share point.

Speaker #3: So I couldn't be more optimistic about our oral care franchise behind the Air Breath.

Anna Lizzul: Great. Thank you so much. Very helpful.

Speaker #5: Great. Thank you so much. Very helpful.

Operator: Your next question comes from the line of Chris Carey with Wells Fargo Securities. Your line is open. Please go ahead.

Speaker #2: Your next question comes from the line of Chris Carey with Wells Fargo Securities. Your line is open. Please go ahead.

Richard Dierker: Hey, Chris, you might be on mute. Oh, there you go.

Rick Dierker: Hey, Chris, you might be on mute. Oh, there you go.

Speaker #3: Hello, Chris. You might be on mute. Oh, there you go.

Chris Carey: Can you hear me?

Speaker #6: Can you hear me?

Speaker #3: Yep.

Richard Dierker: Yep.

Rick Dierker: Yep.

Speaker #6: Can you hear me? How about now?

Chris Carey: Can you hear me? How about now?

Speaker #3: We can hear you.

Richard Dierker: We can hear you.

Rick Dierker: We can hear you.

Speaker #6: Okay, great. Sorry about that. I wanted to start with the oral care portfolio, and specifically the Air Breath rollout. You said that you're getting more than your fair share.

Chris Carey: Okay, great. Sorry about that. I wanted to start with the oral care portfolio and specifically the TheraBreath rollout. You said that you're getting more than your fair share out of the gates. I was wondering how you think you're tracking relative to the ambitions that you outlined at the Investor Day. I think it was an incremental half billion dollars. Do you feel like you're starting out stronger than expected, and was that shipment for that launch a bit stronger in the quarter than perhaps what you anticipated? I was surprised you didn't call it out as some of the key drivers of organic sales. Is that something that we should be mindful for going forward, given the quite robust personal care and Fabric Care organic sales number this quarter? I have a follow-up.

Speaker #6: Out of the gates, I wanted to—I was wondering how you think you're tracking relative to the ambitions that you outlined at the investor day.

Speaker #6: I think it was an incremental half billion dollars. Do you feel like you're, you know, starting out stronger than expected? And was that, you know, shipment, you know, for that launch a bit stronger in the quarter than perhaps what you anticipated?

Speaker #6: I was surprised you didn't call it out some of the key drivers of organic sales. Is that something that we should be mindful for going forward, you know, given the quite robust personal care implied organic sales under this quarter?

Speaker #6: And I have a follow-up.

Speaker #3: Yeah. You know, the Air Breath pace is off to a good start, is what I would say. And it's meeting or slightly beating our expectations.

Richard Dierker: Yeah. TheraBreath paste is off to a good start, is what I would say. It's meeting or slightly beating our expectations. I think there's a lot of great conversations in the works with additional retailers to get behind it, which is fantastic. Those conversations are easier when you have a TheraBreath mouthwash brand and business that's just, again, growing so fantastically well. Yeah, for the quarter, TheraBreath paste was a contributor to net sales for sure. Did it over-deliver a little bit? Maybe some. What was the other part of the question, Chris?

Rick Dierker: Yeah. TheraBreath paste is off to a good start, is what I would say. It's meeting or slightly beating our expectations. I think there's a lot of great conversations in the works with additional retailers to get behind it, which is fantastic. Those conversations are easier when you have a TheraBreath mouthwash brand and business that's just, again, growing so fantastically well. Yeah, for the quarter, TheraBreath paste was a contributor to net sales for sure. Did it over-deliver a little bit? Maybe some. What was the other part of the question, Chris?

Speaker #3: I think there's a lot of great conversations in the works with additional retailers to get behind it, which is fantastic. Those conversations are easier.

Speaker #3: When you have the TheraBreath mouthwash brand and business, that's just, again, growing so fantastically well. So yeah, I mean, for the quarter, the TheraBreath pace was a contributor to net sales for sure.

Speaker #3: Did it over deliver a little bit, maybe, maybe some. What was the other the other part of the question, Chris?

Speaker #6: I think that was about it. It's starting stronger than you expected. It's early days, and it was a bit of a contributor—a bit more than expected.

Chris Carey: I think that was about it. It started stronger than you expected. It's early days, and it was a bit of a contributor, a bit more than expected in Q2, if I heard all that correctly.

Speaker #6: In Q2, if I heard all that correctly—just interrupt me if...

Richard Dierker: Yeah.

Rick Dierker: Yeah.

Chris Carey: Just interrupt me if-

Speaker #3: Oh, yeah. And you really had asked, you know, in terms of the growth initiatives. Like, it's kind of early to talk about how it's doing for the first of the growth initiatives, but it is laying the groundwork, is what I would say.

Richard Dierker: Oh, yeah. Andy really had asked in terms of the growth initiatives. It's kind of early to talk about how it's doing with its first of growth initiatives, laying the groundwork is what I would say, not just in oral care, but all the Arm & Hammer stuff, too. That groundwork and the momentum that we're starting to build is fantastic.

Rick Dierker: Oh, yeah. Andy really had asked in terms of the growth initiatives. It's kind of early to talk about how it's doing with its first of growth initiatives, laying the groundwork is what I would say, not just in oral care, but all the Arm & Hammer stuff, too. That groundwork and the momentum that we're starting to build is fantastic.

Speaker #3: Not just in oral care, but all the Arm & Hammer stuff too. But that groundwork and the momentum that we're starting to build is fantastic.

Speaker #6: Okay. The second question is, I think, you know, this is one of the highest inflation numbers that we've seen over the past four years, or so.

Chris Carey: Okay. The second question is, I think this is one of the highest inflation numbers that we've seen over the past four years or so. How quickly did that develop for you? Was that freight and logistics inflation that happened quicker than you anticipated? Should we be expecting about that kind of number as we go through the rest of the year, or was that Q2 more of an anomaly? I'm also struck just by a bit stronger price mix contribution to both top line and gross margin. Is there a bit of a step change in thinking about how you're going to be covering inflation this year with pricing, or is there a bit of a mixed dynamic in that number as well? Thank you.

Speaker #6: How quickly did that develop for you? Was that freight and logistics inflation something that happened quicker than you anticipated? And should we be expecting about that kind of number as we go through the rest of the year, or was Q2 more of an anomaly?

Speaker #6: And I'm also, you know, struck just by a bit stronger spice mix contribution to both top line and gross margin. Is there a bit of a, you know, step-change in thinking about how you're going to be covering inflation this year with pricing, or is there a bit of, you know, mix dynamic in that number as well?

Speaker #6: Thank you.

Speaker #3: Yeah. Good morning, Chris. So yeah, keep in mind when we talked about the $25 to $30 million of, you know, kind of Middle East-derived inflation, you know, our outlook in Q2, you know, said it was going to be higher in Q2.

Lee McChesney: Yeah. Good morning, Chris. Keep in mind when we talked about the $25 to $30 million of Middle East-derived inflation, our outlook in Q2 said it was going to be higher in Q2. There is some transportation costs that were going to happen right away, and then you could get time to respond to it. Our productivity issues that we kicked off accelerated to mitigate that, we definitely would be more H2. It's a combination of two things. Yeah, that number should drop down, because there's just some anomalies in Q2, and then we have essentially more productivity in the H2. We have this outlook of 100 to 120 basis points of gross margin improvement. You can see where we are halfway through the year.

Speaker #3: You know, there are some transportation costs that are going to happen right away, and then you get time to respond to it. Our productivity issues that we kicked off accelerated to mitigate that.

Speaker #3: We definitely would be more back half. But it's a combination of two things. Yeah, that number should drop down because there are just some anomalies in the second quarter.

Speaker #3: And then, you know, we have essentially more productivity in the back half. So, you know, we have this outlook of 100 to 120 basis points gross margin improvement.

Speaker #3: You can see where we are halfway through the year. You know, that implies that the gross margin will expand over 100 basis points in the back half of the year.

Lee McChesney: That implies that the gross margin will expand over 100 basis points in H2. On the price volume mix, that's a good number. Obviously, we always say never overreact to one quarter. Q1 was just slightly negative. Our mindset is to drive volume growth and we do drive positive mix. That's part of our algorithm. A reminder, this year, we do have the benefit of the portfolio actions that help as well, and that will be a benefit all year.

Speaker #3: On the price volume mix, you know, you know, that's a good number. Obviously, you know, we always say never overreact to one quarter. The first quarter is just slightly negative.

Speaker #3: You know, our mindset is, you know, to drive volume growth and, you know, we do drive positive mix. That's part of our algorithm. And then a reminder, you know, this year we do have the benefit of the portfolio action, so it helped as well.

Speaker #3: And that will be a benefit all year.

Speaker #4: Yeah, and I'd probably say, in the quarter, when we don't spend as much on promotion on laundry, that helps. And year over year, a little bit on the price side of it too.

Lee McChesney: Yeah, I'd probably say in the quarter, when we don't spend as much on promotion on laundry, that helps, year-over-year, a little bit on the price side of it too.

Rick Dierker: Yeah, I'd probably say in the quarter, when we don't spend as much on promotion on laundry, that helps, year-over-year, a little bit on the price side of it too.

Speaker #6: Okay. Great. Thank you.

Chris Carey: Okay, great. Thank you.

Speaker #2: Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Your line is open, please go ahead.

Operator: Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Your line is open. Please go ahead.

Speaker #5: All right. Thank you, and good morning, everyone. I just had a question on your improved outlook for the year. You took up your top-line growth guidance by a point and now expect higher gross margins.

Bonnie Herzog: All right, thank you, and good morning, everyone. I just had a question on your improved outlook for the year. You took up your top-line growth guidance by a point and now expect higher gross margins. While you did raise the lower end of your EPS growth guidance, you kept the high end of the range. Wanted to understand the drivers of that and maybe how much further you plan to step up reinvestments to drive sustainable top-line growth ahead. Also, if you could provide some examples of these investments and any changes you might be making to your strategy, given the pressured macro environment would be helpful. Thanks.

Speaker #5: And while you did raise the lower end of your EPS growth guidance, you did, you know, you kept the high end of the range.

Speaker #5: So, I wanted to understand the drivers of that, and maybe how much further you plan to step up reinvestments to drive sustainable top-line growth going forward.

Speaker #5: Also, if you, you know, could provide some examples of these investments, and any changes you might be making to your strategy given the pressured, you know, macro environment, that would be helpful.

Speaker #5: Thanks.

Speaker #3: Yeah. Thanks, Bonnie. It's a it's a good question. I would say, you know, look back at our track record over the last one, three, five, ten years.

Lee McChesney: Yeah. Thanks, Bonnie. It's a good question. I would say, look back at our track record over the last one, three, five, 10 years. What do we do when we feel like we're over-delivering and performing well against our expectations and against the industry is we tend to spend back. Like we could, in theory, beat earnings and EPS in any one year, but we choose to spend more on marketing, or we spend more on investments. We want to make sure that flywheel is going, that virtuous cycle happens, and we keep gaining share and shelf space and support the innovations that we're launching. Beyond marketing, we've also started to spend money behind AI, and there's some initiatives we have in place where we're going to pull some of those forward as an example, so that we can scale faster.

Rick Dierker: Yeah. Thanks, Bonnie. It's a good question. I would say, look back at our track record over the last one, three, five, 10 years. What do we do when we feel like we're over-delivering and performing well against our expectations and against the industry is we tend to spend back. Like we could, in theory, beat earnings and EPS in any one year, but we choose to spend more on marketing, or we spend more on investments. We want to make sure that flywheel is going, that virtuous cycle happens, and we keep gaining share and shelf space and support the innovations that we're launching. Beyond marketing, we've also started to spend money behind AI, and there's some initiatives we have in place where we're going to pull some of those forward as an example, so that we can scale faster.

Speaker #3: What do we do when we feel like we're overdelivering our expectations and against the industry? As we tend to spin back. Like, we could, in theory, beat earnings and EPS in any one year, but we choose to spend more on marketing.

Speaker #3: Or we spend more on investments. And so we want to make sure that flywheel is going, that virtuous cycle happens, and we keep gaining share and shelf space and support the innovations that we're launching.

Speaker #3: We all so beyond marketing, we're also going to spend we've also started to spend money behind AI. And there's some initiatives we have in place where we're going to pull some of those forward as an example.

Speaker #3: So that we can scale faster. You know, one of our core competencies—and, I think, competitive advantages—is really our speed and agility. And so we're going to try to adopt and adapt faster than most people.

Lee McChesney: One of our core competencies, and I think competitive advantages, is really our speed and agility. We're going to go try to adopt and adapt faster than most people.

Rick Dierker: One of our core competencies, and I think competitive advantages, is really our speed and agility. We're going to go try to adopt and adapt faster than most people.

Speaker #5: All right. Thank you for that. I'll pass it on.

Bonnie Herzog: All right. Thank you for that. I'll pass it on.

Speaker #2: Your next question comes from the line of Peter Graham with UBS. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Peter Grom with UBS. Your line is open. Please go ahead.

Speaker #4: Great. Thank you. Good morning, everyone. So you mentioned that consumption is your largest category. I think we're 2.7% in the quarter. Above your expectation for 2%.

Peter Grom: Great, thank you. Good morning, everyone. You mentioned that consumption in your largest category, I think, grew 2.7% in the quarter, above your expectations of 2%. Obviously a lot of moving pieces within the quarter itself. Kind of curious if you could speak to what you saw throughout the quarter and maybe more specifically, the exit rate. Just kind of as you think about the back half of the year, what are you embedding in terms of category growth?

Speaker #4: So, you know, obviously a lot of moving pieces within the quarter itself. So kind of curious if you could speak to what you saw throughout the quarter, and maybe more specifically, the exit rate.

Speaker #4: And just kind of as you think about the back half of the year, what are you embedding in terms of category growth?

Speaker #3: Yeah. I mean, the short answer is we're still assuming around 2% for category growth. We continue to do better than that, as you saw in the last couple of quarters.

Lee McChesney: Yeah, the short answer is, we're still assuming around 2% for category growth. We continue to do better than that, as you saw in the last couple of quarters. I think that's a good, in general, walking around number for a while. Our monthly consumption numbers in Q2 were fantastic. June was also good, with the exception of laundry, as we didn't repeat some promotions in laundry. Sometimes we choose to do that. We also had a club promotion that we didn't do in the quarter as well. I would say we did that fantastic growth with flattish impact from one of our larger businesses. Again, consumption's going really well. Shares are doing really well. It's broad based to my first answer to kind of Rupesh's question early on. There are a lot of things that are going right.

Rick Dierker: Yeah, the short answer is, we're still assuming around 2% for category growth. We continue to do better than that, as you saw in the last couple of quarters. I think that's a good, in general, walking around number for a while. Our monthly consumption numbers in Q2 were fantastic. June was also good, with the exception of laundry, as we didn't repeat some promotions in laundry. Sometimes we choose to do that. We also had a club promotion that we didn't do in the quarter as well. I would say we did that fantastic growth with flattish impact from one of our larger businesses. Again, consumption's going really well. Shares are doing really well. It's broad based to my first answer to kind of Rupesh's question early on. There are a lot of things that are going right.

Speaker #3: I think that's a good, in general, walking around number for a while. Our monthly consumption numbers in Q2 were fantastic. You know, June was also good, with the exception of laundry, as we didn't repeat some promotions in laundry.

Speaker #3: Sometimes we choose to do that. We also had a, you know, a club promotion that we didn't do in the quarter as well.

Speaker #3: So, I would say we did that fantastic growth with really flattish impact from one of our larger businesses. So, again, consumption is going really well.

Speaker #3: Shares are doing really well. It's broad-based—to my first answer to a kind of repetitious question early on. So, there are a lot of things that are going right.

Speaker #3: So this is the right time for us as a company, especially because we're not distracted with some of those businesses that we've sold, Peter.

Lee McChesney: This is the right time for us as a company, especially because we're not distracted with some of those businesses that we've sold, Peter. We have the time to focus on the future. We're laying the groundwork for those three growth initiatives that we've talked about again and again and again. A lot of internal time is being spent on the future right now.

Rick Dierker: This is the right time for us as a company, especially because we're not distracted with some of those businesses that we've sold, Peter. We have the time to focus on the future. We're laying the groundwork for those three growth initiatives that we've talked about again and again and again. A lot of internal time is being spent on the future right now.

Speaker #3: We have the time to focus on the future, and so we're laying the groundwork for those three growth initiatives that we've talked about again and again and again.

Speaker #3: And so a lot of internal time is being spent on the future right now.

Speaker #4: That makes sense. And then, you know, Rick, you mentioned we're going to get some more color at a later date. But you did say that you were more optimistic than ever.

Peter Grom: That makes sense. Rick, you mentioned we're going to get some more color at a later date, you did say that you were more optimistic than ever. I guess just looking at the guidance and the Q4 implied exit rate would suggest some pretty nice momentum heading into next year. Maybe, putting that all together, can you maybe just discuss why you are as optimistic as you've ever been, and maybe what that means as it pertains to top and bottom-line growth?

Speaker #4: And I guess just looking at the guidance and the Q4 implied exit rate, you know, it suggests pretty nice momentum heading into next year.

Speaker #4: So maybe, you know, putting that all together, can you just discuss why you are as optimistic as you've ever been? And maybe what that means as it pertains to top- and bottom-line growth.

Speaker #3: Yeah. I don't know if I'll go to top and bottom line growth yet, but I'll tell you, like, we're doing all this category work in arm and hammer.

Richard Dierker: Yeah. I don't know if I'll go to top and bottom-line growth yet, I'll tell you, we're doing all this category work in Arm & Hammer. We're getting real consumer feedback. We're getting real good buy-in from some retailers on the ideas. We're making great progress on how and why they have a reason for being and have a right to win in a certain category. It's obvious why we're happy about TheraBreath and its success, meanwhile, internationally, that brand, along with Hero, is really developing into a business of tens of millions of dollars. There's good global expansion going on. The third growth initiative was really international growth. A piece of that is international M&A.

Rick Dierker: Yeah. I don't know if I'll go to top and bottom-line growth yet, I'll tell you, we're doing all this category work in Arm & Hammer. We're getting real consumer feedback. We're getting real good buy-in from some retailers on the ideas. We're making great progress on how and why they have a reason for being and have a right to win in a certain category. It's obvious why we're happy about TheraBreath and its success, meanwhile, internationally, that brand, along with Hero, is really developing into a business of tens of millions of dollars. There's good global expansion going on. The third growth initiative was really international growth. A piece of that is international M&A.

Speaker #3: We're getting real consumer feedback. We're getting really good buy-in from some retailers on the ideas. We're making great progress on how and why they have a reason for being and have a right to win in a certain category.

Speaker #3: It's obvious why we're happy about TheraBreath and its success. Meanwhile, internationally, that brand, along with Hero, is really developing a business of tens of millions of dollars.

Speaker #3: So there's good global expansion going on. And then, the third growth initiative was really international growth. And a piece of that is international M&A.

Speaker #3: And we've been talking a lot over the past few years about, hey, we have people here now. We have a process here now. But it's starting to go from theoretical to practical.

Richard Dierker: We've been talking a lot over the past few years about, hey, we have people here now, we have a process here now, it's starting to go from theoretical to practical. We've filtered through 100 deals over the last six to 12 months now internationally. We're being as picky and as fussy as we always would be with any deal, now we're starting to see the deal flow, which is great. Those are some examples.

Rick Dierker: We've been talking a lot over the past few years about, hey, we have people here now, we have a process here now, it's starting to go from theoretical to practical. We've filtered through 100 deals over the last six to 12 months now internationally. We're being as picky and as fussy as we always would be with any deal, now we're starting to see the deal flow, which is great. Those are some examples.

Speaker #3: And, you know, we've filtered through 100 deals over the last, you know, 6 to 12 months now internationally. And so we're being as picky and as fussy as we always would be with any deal.

Speaker #3: But now we're starting to see the deal flow, which is great. So those are some examples.

Speaker #4: Great. Thank you so much. I'll pass it on.

Steve Powers: Great. Thank you so much. I'll pass it on.

Speaker #2: Your next question comes from the line of Olivia Tong with Raymond James.

Operator: Your next question comes from the line of Olivia Tong with Raymond James.

Speaker #5: Great, thanks. Good morning. Regarding the competitive backdrop, you mentioned the promotional environment. Everyone is obviously talking about their various investments in affordability. I realize this isn't new to you, though.

Olivia Tong: Great. Thanks. Good morning. Regarding the competitive backdrop, you mentioned the promotional environment. Everyone's obviously talking about their various investments in affordability. I realize this isn't new to you, though perhaps there are more tools out there now, whether it's leveraging retail relationships, AI, and other tools. To the extent that your competitors continue to invest in some of the affordability initiatives that they're pushing, can you provide a little bit more in terms of how you think about combating those, particularly if they start to continue to increase?

Speaker #5: Perhaps there are more tools out there now, whether it's leveraging retail relationships, AI, and other tools. So to the extent that your competitors continue to invest in some of the affordability initiatives that they're pushing, can you provide a little bit more in terms of how you think about combating those particularly if they start to continue to increase?

Speaker #3: Yeah, I think it's a fair question, Olivia. I would just tell you, though, look at our track record over the last—not one or five, but a decade or two—of how we compete in household, right?

Richard Dierker: Yeah. I think it's a fair question, Olivia. I would just tell you, though, look at our track record over the last not one or five, but decade or two of how we compete in household. Right? We have a great ability to do that, and sometimes it's trade promotion. Hopefully, usually it's innovation, hitting the right price pack architecture, and sizing. You want to deliver, like I said in my remarks, a great high quality at a value price for the consumer. It just so happens that our brands are the intersection of that naturally. Competitors have to compete a lot harder than we do because we naturally fall in those intersections.

Rick Dierker: Yeah. I think it's a fair question, Olivia. I would just tell you, though, look at our track record over the last not one or five, but decade or two of how we compete in household. Right? We have a great ability to do that, and sometimes it's trade promotion. Hopefully, usually it's innovation, hitting the right price pack architecture, and sizing. You want to deliver, like I said in my remarks, a great high quality at a value price for the consumer. It just so happens that our brands are the intersection of that naturally. Competitors have to compete a lot harder than we do because we naturally fall in those intersections.

Speaker #3: And we have a great ability to do that. And sometimes it's trade promotion, hopefully usually it's innovation, hitting the right price pack architecture and sizing.

Speaker #3: You want to deliver, like I said in my remarks, a great, high-quality product at a value price for the consumer. And it just so happens that our brands are naturally at the intersection of that.

Speaker #3: And so they have to competitors have to compete a lot harder than we do because we naturally fall in those intersections.

Speaker #5: Got it. And then on Mismal, sort of similar to Hero, TheraBreath, Touchland—I know it's early days—but what do you think Mismal can bring to you in terms of discussions with new retailers, new categories, geographic opportunities as you sort of assess the ability to grow that business beyond where it sits right now?

Olivia Tong: Got it. On Miss Mouth's, sort of similar to Hero, TheraBreath, Touchland. I know it's early days, but what do you think Miss Mouth's can bring to you in terms of discussions with new retailers, new categories, geographic opportunities as you sort of assess the ability to grow that business beyond where it sits right now?

Speaker #3: Yeah, it has the ability to do all that. When really, you have a brand that's driving category growth, it's driving usage occasions, it's driving new consumers—and young consumers, at that—into the category.

Richard Dierker: Yeah. It has the ability to do all of that. When really you have a brand that's driving category growth, that's driving usage occasions, that's driving new consumers and young consumers at that into the category. It has a magic moment. It's actually not even the same consumer as OxiClean. OxiClean's a little bit more broader based, but Miss Mouth's is really a higher end and just a great see something, do something in terms of the stain. I don't want to get into too much detail. I would just say it is additive for every retail conversation that we have and we're working hard to not just do current capacity, but also what the future of that brand and where consumers say it has the right to go, because it's going to continue to broaden on forms and maybe even adjacencies.

Rick Dierker: Yeah. It has the ability to do all of that. When really you have a brand that's driving category growth, that's driving usage occasions, that's driving new consumers and young consumers at that into the category. It has a magic moment. It's actually not even the same consumer as OxiClean. OxiClean's a little bit more broader based, but Miss Mouth's is really a higher end and just a great see something, do something in terms of the stain. I don't want to get into too much detail. I would just say it is additive for every retail conversation that we have and we're working hard to not just do current capacity, but also what the future of that brand and where consumers say it has the right to go, because it's going to continue to broaden on forms and maybe even adjacencies.

Speaker #3: You know, it has a magic moment—it's actually not even the same consumer as OxiClean. You know, OxiClean is a little bit more broader-based.

Speaker #3: But Mis-mal is really a higher-end, and just a great 'see something, do something' in terms of the stain. I don't want to get into too much detail.

Speaker #3: I would just say it is additive for every retail conversation that we have. And we're working hard to not just do current capacity, but also to look at what the future of that brand is, and where it has the right—where consumers say it has the right—to go.

Speaker #3: Because it's going to continue to broaden on forums and maybe even adjacencies.

Speaker #5: Understood. Thank you.

Olivia Tong: Understood. Thank you.

Speaker #2: Your next question comes from the line of Steve Powers with Deutsche Bank. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Steve Powers with Deutsche Bank. Your line is open. Please go ahead.

Speaker #6: Hey, great. Good morning, guys. To start, you know, I think year to date, Rick, the consumption that you put—I mean, the results you put up.

Steve Powers: Hey, great. Good morning, guys. To start, I think year to date, Rick, the results you put up around 5% volume metric shipments, both for the total company and I think even in the consumer domestic business, I guess. How does that compare to your views on consumption year to date, and how does that inform your back half thinking? I guess juxtaposed against that, it sounds like you've made some choices this quarter that benefited the price mix line that seem kind of unique to the quarter. I guess as I think forward, do we see sort of a return to more of a more full promotional stance in the back half as well?

Speaker #6: Around to, you know, 5% volumetric shipments, both for the total company and I think even in the consumer domestic business, I guess. How does that compare to your views on consumption year to date?

Speaker #6: And how does that inform your back half thinking? And I guess juxtaposed against that, you know, it sounds like you made some choices this quarter that, you know, benefited the price mix line, that it seemed kind of unique to the quarter.

Speaker #6: So, I just think, I guess, as I think forward, you know, do we see sort of a return to more of a full promotional stance in the back half as well?

Speaker #3: Yeah, I would say consumption and our organic—there is no real disconnect. It's around 5% or so on both. So there's great momentum that we experienced in the first half.

Richard Dierker: I would say consumption and our organic, there is no real disconnect. It's around 5% or so on both. There's great momentum that we experienced in H1. In H2, we expect a lot of that to continue. I think we pulled the data on a 2-year stack, as an example, and the 2-year stack for organic growth is 5% in H1 and 6% in H2. Again, just really broad-based, more than just one thing going on as a tailwind for the company. You're right, I kind of referenced a little bit, maybe a bit of a pullback in promotion that we had. I wouldn't even say a pullback. I'd say we were at a certain level, and there was an acceleration by other competitors.

Rick Dierker: I would say consumption and our organic, there is no real disconnect. It's around 5% or so on both. There's great momentum that we experienced in H1. In H2, we expect a lot of that to continue. I think we pulled the data on a 2-year stack, as an example, and the 2-year stack for organic growth is 5% in H1 and 6% in H2. Again, just really broad-based, more than just one thing going on as a tailwind for the company. You're right, I kind of referenced a little bit, maybe a bit of a pullback in promotion that we had. I wouldn't even say a pullback. I'd say we were at a certain level, and there was an acceleration by other competitors.

Speaker #3: And in the second half, we expect a lot of that to continue. I think, even—like, I think we pulled the data on the two-year stack as an example.

Speaker #3: And the two-year stack for organic growth is 5% in the first half and 6% in the second half. So again, it's really broad-based—more than just one thing going on—as a tailwind for the company.

Speaker #3: And you're right. I kind of referenced a little bit, maybe a bit of a pullback in promotion that we had. I wouldn't even say a pullback.

Speaker #3: I'd say we were at a certain level, and there was an acceleration by other competitors. So, I don't know about a year of, you know, much year-over-year change from a price/mix perspective, but a little bit of help from laundry.

Richard Dierker: I don't know about much year-over-year change from a price mix perspective, but a little bit from help from laundry. There are other things happening in the portfolio. As we have these higher margin products like a TheraBreath, or like a Hero, or even like a Miss Mouth's, as they continue to grow, that's going to be a favorable flow on mix. Lee, anything you would add to that?

Rick Dierker: I don't know about much year-over-year change from a price mix perspective, but a little bit from help from laundry. There are other things happening in the portfolio. As we have these higher margin products like a TheraBreath, or like a Hero, or even like a Miss Mouth's, as they continue to grow, that's going to be a favorable flow on mix. Lee, anything you would add to that?

Speaker #3: But there are other things happening in the portfolio. You know, as we have these higher-margin products, like TheraBreath, or like Hero, or even like a Miss Mouth, as they continue to grow, that's going to be a favorable flow on mix.

Speaker #3: Lee, anything you would add to that?

Speaker #4: Yeah, I mean, I think Rick said it well. I mean, we focus on volume growth. If you look at our history on price/mix, it's, you know, neutral to positive.

Lee McChesney: I think Rick said it well. We focus on volume growth. If you look at our history on price mix, it's neutral to positive. It was just a little bit slightly higher in Q2. Some of that's a little bit year-over-year. As we look forward, that's going to be the equation. It's going to be volume driven. We'll benefit from the things Rick talked about. The way we're positioned. We will do what we do on discounting, but we don't have to do as much as the others do.

Speaker #4: You know, it's just a little bit slightly higher in the second quarter. Some of that's a little bit of year over year. So you look forward, that's going to be the equation.

Speaker #4: It's going to be volume-driven. And, you know, we'll benefit from the things Rick talked about — you know, the way we're positioned. You know, we will do what we do on discounting, but we don't have to do as much as the others do.

Speaker #6: Perfect. Perfect. And then, Rick, I was hoping you could talk a little bit more about international M&A. As you said, you've been talking about it for a while.

Steve Powers: Perfect. Then Rick, I was hoping you could talk a little bit more about international M&A. As you said, you've been talking about it for a while. It seems from the way you're talking about it now, the excitement is building, anticipation is building. I guess, have you learned anything in terms of, the opportunity's been there on paper for a long time, but it's also taken a little while to manifest in a transaction. Have you learned anything in terms of where it's harder or not? Just any perspective on kind of the opportunities you see it today versus when you set out to focus on this initiative?

Speaker #6: It seems from your from the way you're talking about it now, the excitement is building. Anticipation is building. But I guess as you have you learned anything in terms of I mean, the opportunity has been there on paper for a long time, but it's also you know, it's taken a little while to manifest in a transaction.

Speaker #6: Is it have you learned anything in terms of where it's harder just or not? Just any perspective on kind of the opportunities you see it today versus when you set out to focus on this initiative?

Speaker #3: Yeah, you know, I think we were busting our pick on it for a little while, and it was all about people and structure. It wasn't a bad approach, but initially, we added M&A people and a person in Europe, for example, and I would say it was a little bit disconnected from the management teams.

Richard Dierker: Yeah. I think we were busting our pick on it for a little while. It was all about people and structure. It wasn't a bad approach, but initially, we added M&A people and a person in Europe, for example. I would say it was a little bit disconnected from the management teams. It was almost like a center of excellence on M&A. We changed that approach about six to eight months ago. We said the management teams are responsible, and the M&A person supports that. All of a sudden, the international management teams, the country director and his or her staff, Australia, the same thing, Southeast Asia, the same thing, and Latin America, the same thing.

Rick Dierker: Yeah. I think we were busting our pick on it for a little while. It was all about people and structure. It wasn't a bad approach, but initially, we added M&A people and a person in Europe, for example. I would say it was a little bit disconnected from the management teams. It was almost like a center of excellence on M&A. We changed that approach about six to eight months ago. We said the management teams are responsible, and the M&A person supports that. All of a sudden, the international management teams, the country director and his or her staff, Australia, the same thing, Southeast Asia, the same thing, and Latin America, the same thing.

Speaker #3: It was almost like a center of excellence on M&A. We changed that approach about six to eight months ago and said the management teams are responsible.

Speaker #3: And the M&A person supports that. And so, with M&A, all of a sudden the international management teams—you know, the country director and his or her staff in Australia, the same thing.

Speaker #3: And Southeast Asia, the same thing. And Latin America, the same thing. You have a right to go and an obligation to go look at not just what you hear from the bankers or from our M&A contact, but where do you want what brands would you like to go and look at?

Richard Dierker: You have a right to go and an obligation to go look at not just what you hear from the bankers or for our M&A contact, but where do you want, what brands would you like to go and look at? When we made it, I guess, their objective, and they owned it, I'd say that was the unlock for us. Of course, our M&A team is enabling and helping, but I think we went right from first to third gear since we did that.

Rick Dierker: You have a right to go and an obligation to go look at not just what you hear from the bankers or for our M&A contact, but where do you want, what brands would you like to go and look at? When we made it, I guess, their objective, and they owned it, I'd say that was the unlock for us. Of course, our M&A team is enabling and helping, but I think we went right from first to third gear since we did that.

Speaker #3: And that's when we made it, I guess, their objective, and they owned it. I'd say that was the unlock for us. And of course, our M&A team is enabling and helping, but I think we went from, like, you know, right from first to third gear since we did that.

Speaker #6: Okay. Perfect. Thanks so much. Pass it on.

Steve Powers: Okay, perfect. Thanks so much. Pass it on.

Speaker #2: Your next question comes from the line of Lauren Lieberman with Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Lauren Lieberman with Barclays. Your line is open. Please go ahead.

Lauren Lieberman: Great, thanks. I had two questions. First was, at the risk of being redundant, because I got a little bit confused on Chris's question and the answer, which is the gross margin this quarter. I know you gave the bridge. In total, it did come in below your expectations, and there wasn't a huge change on the inflation guide, as you guys pointed out. Just curious on the slight shortfall in gross margins this quarter. My second question was just about how Touchland is trending. It's going to slide into organic sales going forward from here, so just wanted to get an update on that brand. Thanks.

Speaker #5: Great, thanks. So, I had two questions. First, at the risk of being redundant, because I got a little bit confused along the way on Chris's question and the answer—was just the gross margin this quarter?

Speaker #5: I know you gave the bridge. But in total, if you'd come in below your expectations and there wasn't a huge change on the inflation guide, as you guys pointed out.

Speaker #5: So, just curious about the slight shortfall in gross margins this quarter. And then my second question is just about how Tesland is trending—it's been sliding—so, organic sales, going forward from here.

Speaker #5: So, just wanted to get an update on that brand. Thanks.

Speaker #4: All right, so I'll take the first question. Just to answer the question, we had slightly higher transportation costs in the second quarter.

Lee McChesney: All right. I'll take the first question. Yeah, just to answer the question, we had just slightly higher transportation costs in Q2. Even a little bit higher than we thought. As we talked about for the year, we're still at $30 million all in, so same type of impact overall.

Speaker #4: Even a little bit higher than we thought. But as we talked about for the year, you know, we're still at $30 million. So, same type of impact overall.

Richard Dierker: On Touchland, I think my comments were really, we had sales growth in Q2. We have a lot of back H2-weighted innovation, new collaborations with other brands, and some activations up and down the channel. We expect sales growth in H2 of the year. We have a lot of work going on in innovation into, as we said before, another category or two and some other distribution opportunities, plus international expansion. I think that's a muscle that we've built really well with some of these brands now. Takes a little bit regulatory perspective, but that's going to start hitting in 2027 as well. That should be a tailwind. Okay. We'll take next question.

Speaker #3: And then on Tesland, I think my comments were really sales growth in the second quarter. We have a lot of back half-weighted innovation, new collaborations with other brands, and some activations.

Rick Dierker: On Touchland, I think my comments were really, we had sales growth in Q2. We have a lot of back H2-weighted innovation, new collaborations with other brands, and some activations up and down the channel. We expect sales growth in H2 of the year. We have a lot of work going on in innovation into, as we said before, another category or two and some other distribution opportunities, plus international expansion. I think that's a muscle that we've built really well with some of these brands now. Takes a little bit regulatory perspective, but that's going to start hitting in 2027 as well. That should be a tailwind. Okay. We'll take next question.

Speaker #3: Up and down the channel, we expect sales growth in the second half of the year. And then we have a lot of work going on on innovation into as we said before, another category or two.

Speaker #3: And some other distribution opportunities, plus international expansion. I think that’s a hustle that we’ve built really well with some of these brands now. It does take a bit from a regulatory perspective, but that’s going to start hitting in 2027 as well.

Speaker #3: So that should be a tailwind. Okay, we'll take the next question.

Speaker #2: Your next question comes from the line of Javier Escalonte with Evercore ISI. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Javier Escalante with Evercore ISI. Your line is open. Please go ahead.

Speaker #7: Hi. Good morning. I guess the punchline in laundry is that Arm & Hammer is holding share without promoting, or promoting less, and while the others promote. But I don't know whether I heard this correctly, because it sounded like a big number, but did you say that Henkel increased promotional activity by how much?

Javier Escalante: Hi. Good morning. I guess the punchline in laundry is that Arm & Hammer is holding share without promoting or promoting less and while the others promote. I don't know whether I heard this correctly because it sounded like a big number, but did you say that Henkel increased promotional activity by how much?

Speaker #7: And.

Speaker #3: Yeah. I said a little better basis points.

Richard Dierker: Yeah, I said 11 basis points.

Rick Dierker: Yeah, I said 11 basis points.

Speaker #7: Okay. So that's high. So what does it mean right now given how the oil is trending? Do you have you seen any change given that the category is so slow?

Javier Escalante: Okay. That's high. What does it mean right now given how the oil is trending? Have you seen any change given that the category is so slow? If you can clarify that a little bit.

Speaker #7: So, if you can clarify that a little bit.

Speaker #3: Yeah, no, it's a good question, Javier. And look, I think I said last quarter, when commodities are high and they stay high for a while, what tends to happen?

Richard Dierker: Yeah, no, it's a good question, Javier. Look, I think I said last quarter, when commodities are high and they stay high for a while, what tends to happen? Promotion tends to kind of dial back a bit. That is not what happened this past quarter. My belief is a lot of people got tariff refunds, and they're spending it back and trying to drive volume. The good news for us is, again, Arm & Hammer is at that intersection of value and just quality, and we don't need to promote as much in order to hit that kind of price point. We held share, which is fantastic.

Rick Dierker: Yeah, no, it's a good question, Javier. Look, I think I said last quarter, when commodities are high and they stay high for a while, what tends to happen? Promotion tends to kind of dial back a bit. That is not what happened this past quarter. My belief is a lot of people got tariff refunds, and they're spending it back and trying to drive volume. The good news for us is, again, Arm & Hammer is at that intersection of value and just quality, and we don't need to promote as much in order to hit that kind of price point. We held share, which is fantastic.

Speaker #3: Promotion tends to kind of dial back a bit. That is not what happened this past quarter. You know, my belief is a lot of people got tariff refunds and they're spending it back.

Speaker #3: And trying to drive volume. The good news for us is, again, Arm & Hammer is at that intersection of value and quality, and we don't need to promote as much.

Speaker #3: In order to hit that kind of price point. And so we held share, which is fantastic. And as we increase promotion a little bit, at historical levels of course, I tend to think that we're going to continue to do what we've done for the last 15 or 20 years.

Richard Dierker: As we increase promotion a little bit at historical levels, of course, I tend to think that we're going to continue to do what we've done for the last 15, 20 years, is gain share in Arm & Hammer year after year.

Rick Dierker: As we increase promotion a little bit at historical levels, of course, I tend to think that we're going to continue to do what we've done for the last 15, 20 years, is gain share in Arm & Hammer year after year.

Speaker #3: It's gained share in Arm & Hammer year after year.

Speaker #7: Thank you. And my second one is in cat litter. You know, it continues to do really well. You mentioned in Q1 that you got the strongest GDP growth in the HPC.

Javier Escalante: Thank you. My second one is in Cat Litter, continue doing really well. You mentioned in Q1 that you got the strongest TDP growth in HPC, and we are seeing it. Heading into back to school, any change in distribution, particularly in this business, if you can comment on that. Thank you.

Speaker #7: And we are seeing it. So, heading into back-to-school, any change in distribution, particularly in this? Thank you.

Speaker #3: Yeah, I would say litter is doing extremely well. You know, to have 7.5% consumption growth and almost a full share point gained is great.

Richard Dierker: I would say litter is doing extremely well. To have 7.5% consumption growth and almost a full share point gained, is great. We're doing that the right way. We're doing that the way we've always done it, which is innovation. Arm & Hammer Cat Litter is just known for innovation. Our new one this year on Dual Defense with Microban is a great example of that. Some competitors are spending a lot. We're within historical levels, and we're doing all the right things. We've talked before about some of the attributes of why Arm & Hammer does so well. We have the orange box. We have the black box. We have premium value. Just again, litter's doing great.

Rick Dierker: I would say litter is doing extremely well. To have 7.5% consumption growth and almost a full share point gained, is great. We're doing that the right way. We're doing that the way we've always done it, which is innovation. Arm & Hammer Cat Litter is just known for innovation. Our new one this year on Dual Defense with Microban is a great example of that. Some competitors are spending a lot. We're within historical levels, and we're doing all the right things. We've talked before about some of the attributes of why Arm & Hammer does so well. We have the orange box. We have the black box. We have premium value. Just again, litter's doing great.

Speaker #3: And we're doing that the right way. We're doing that the way we've always done it, which is innovation. Arman Hammer cat litter is just known for innovation.

Speaker #3: Our new one this year on Dual Defense with Microban is a great example of that. And you know, some competitors are spending a lot.

Speaker #3: We're within historical levels, and we're doing all the right things. We've talked before about some of the attributes of why Arm & Hammer does so well.

Speaker #3: We have, you know, the orange box. We have the black box. We have premium value. So just again, litter is doing great.

Speaker #7: Thank you.

Javier Escalante: Thank you.

Speaker #2: Your next question comes from the line of Robert Moscow with TD Cowen. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Robert Moskow with TD Cowen. Your line is open. Please go ahead.

Speaker #8: Okay, thank you. One of the many positive surprises here is that there's no mention of retailers reducing inventory in your categories. So, my first question is: how do you think you dodged that bullet?

Robert Moskow: Thank you. One of the many positive surprises here is there's no mention of retailers reducing inventory in your categories. My first question is, how do you think you dodged that bullet? Do you think it's because of the categories, or do you think it's just because you in particular have the right inventory levels? I had another question on Touchland. You mentioned that it grew, but there's not a lot of commentary on how much it grew. Is the pace of growth decelerating compared to Q1? Can you be more specific for us? Thanks.

Speaker #8: Do you think it's because of the categories, or do you think it's just because you in particular have the right inventory levels? And I had another question on Touchland.

Speaker #8: You mentioned that it grew, but there's not a lot of commentary on how much it grew. Is the pace of growth decelerating compared to the first quarter?

Speaker #8: Can you be more specific for us? Thanks.

Speaker #3: Yeah. So, let's see. The first question is on retail inventory. Look, if you look back at all of our transcripts—probably for the last 10 or 15 years—we've talked about retail inventory.

Richard Dierker: Yeah. Let's see. The first question is on retail inventory. Look, if you look back at all of our transcripts, probably for the last 10 or 15 years, we've talked about retail inventory maybe two or three times, and two of those times were earlier in 2025. There's always dynamics that are happening with retail inventory, but we never believe they are impactful enough for us to comment on or something that we can't overcome. There's I would say, some movement, but overall immaterial.

Rick Dierker: Yeah. Let's see. The first question is on retail inventory. Look, if you look back at all of our transcripts, probably for the last 10 or 15 years, we've talked about retail inventory maybe two or three times, and two of those times were earlier in 2025. There's always dynamics that are happening with retail inventory, but we never believe they are impactful enough for us to comment on or something that we can't overcome. There's I would say, some movement, but overall immaterial.

Speaker #3: Maybe two or three times, and two of those times were earlier in 2025. There are always dynamics that are happening with retail inventory, but we never believe they are impactful enough for us to comment on or something that we can't overcome.

Speaker #3: So there's, I would say, some movements, but overall immaterial. The second one is on Touchland. I would say the business is growing, and our outlook for that is probably high single digits these days.

Richard Dierker: The second one is on Touchland. I would say the business is growing, and our outlook for that is probably high single digits these days. Again, we're really comforted by the fact that we have this great innovation lineup. We have this great collab lineup coming. A lot of the support that we have in the back half with displays from these retailers. Yeah. Touchland, continue to be optimistic about it.

Rick Dierker: The second one is on Touchland. I would say the business is growing, and our outlook for that is probably high single digits these days. Again, we're really comforted by the fact that we have this great innovation lineup. We have this great collab lineup coming. A lot of the support that we have in the back half with displays from these retailers. Yeah. Touchland, continue to be optimistic about it.

Speaker #3: But again, we're really comforted by the fact that we have this great innovation lineup. We have this great collab lineup coming, and a lot of the support that we have in the back half with displays from these retailers.

Speaker #3: So, yeah. So, Touchland continues to be optimistic about it.

Speaker #8: Okay. Thanks.

Robert Moskow: Okay, thanks.

Speaker #2: Your next question comes from the line of Filippo Filorni with Citi. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Filippo Falorni with Citi. Your line is open. Please go ahead.

Speaker #9: Hi. Good morning, everyone. I want to talk about the international business. Solid performance there. It now continues to deliver on pretty tough comparisons.

Filippo Falorni: Hi. Good morning, everyone. I want to talk about the international business. Solid performance there. It's now continuing to deliver on pretty tougher comparisons. Maybe can you give us a sense of what regions are driving the growth there, where are you seeing the strength? The second part of the question, as you think about the opportunity for some of the recent acquisitions like TheraBreath, Hero, Touchland, how much more opportunity you see for expansion of those brands internationally? Thank you.

Speaker #9: Maybe can you give us a sense of what regions are driving the growth there? Where are you seeing the strength? And then, second part of the question, as you think about the opportunity for some of the recent acquisitions, like Therabreath, Hero, Touchland, how much more opportunity do you see for expansion of those brands internationally?

Speaker #9: Thank you.

Speaker #3: Yeah, I'll take the brand one, and then I'll let Lee talk about the countries and the regions. But we are still in the early innings—using a baseball analogy—for TheraBreath and Hero.

Richard Dierker: Yeah, I'll take the brand one, then I'll let Lee talk about the countries and the regions. We are still in early innings for a baseball analogy for TheraBreath and Hero, and very early for Touchland. I think we're hitting number one share positions in many countries all over the world. We have great retailer discussions about how we're growing the acne category with Hero. Of course, the mouthwash rollout is a little bit slower than the acne rollout, but they're both doing extremely well. Once they get in market, these brands, because they're a problem solution, because consumers can see them working, because they're premium brands for retail, they're driving category growth. Once they're in market, it starts to become kind of a virtuous cycle.

Rick Dierker: Yeah, I'll take the brand one, then I'll let Lee talk about the countries and the regions. We are still in early innings for a baseball analogy for TheraBreath and Hero, and very early for Touchland. I think we're hitting number one share positions in many countries all over the world. We have great retailer discussions about how we're growing the acne category with Hero. Of course, the mouthwash rollout is a little bit slower than the acne rollout, but they're both doing extremely well. Once they get in market, these brands, because they're a problem solution, because consumers can see them working, because they're premium brands for retail, they're driving category growth. Once they're in market, it starts to become kind of a virtuous cycle.

Speaker #3: And very early for Touchland. I think we're hitting number one share positions in many, many countries all over the world. We have great retailer discussions about how we're growing the acne category with Hero.

Speaker #3: And of course, the mouthwash rollout is a little bit slower than the acne rollout, but they're both doing extremely well. And once they get in market, these brands—because they are problem-solution, because consumers can see them working, because they're premium brands for retail—are driving category growth.

Speaker #3: Once they're in market, it starts to become kind of a virtuous cycle.

Speaker #7: And I'll just pick up from there. Certainly, Hero, TheraBreath—the taste is a great driver in the quarter for us. And then, if you think about that, we're taking those across the globe.

Lee McChesney: I'll just pick up from there. Certainly, Hero, TheraBreath, Batiste was a great driver in the quarter for us. If you think about that, we're taking those across the globe. That's what we do really well. You ask, which part's doing well? Quite frankly, very broadly. Europe, for example, Europe as an economy wants to be slower. We're growing at the levels you see at the total level here, doing really well in Asia and Latin America as well. You said this in Q1. Q1 had a little bit of impact in the Middle East. You take it out, it was growing towards mid to high single digits. The outlook for the business is to be high single digits. That's what it is in the Evergreen model. It was great to see another strong quarter from them.

Speaker #7: That's what we do really well. So, you ask, like, which parts are doing well? Quite frankly, very broadly. Europe, for example—Europe as an economy wants to be slower.

Speaker #7: We're growing at the levels you see at the total level here, doing really well in Asia and Latin America as well. So, you said this in the first quarter.

Speaker #7: The first quarter had a little bit of impact in the Middle East. If you take that out, it was growing towards mid- to high-single digits.

Speaker #7: The outlook for the business is to be high single digits. That's what it is in the evergreen model, and it was great to see another strong quarter from them.

Speaker #9: Great. Thank you, guys.

Filippo Falorni: Great. Thank you, guys.

Speaker #2: Your next question comes from the line of Andrea Texera with JP Morgan. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Andrea Teixeira with JPMorgan. Your line is open. Please go ahead.

Speaker #9: Thank you, operator. Hi, everyone. I just wanted to go back to what you mentioned about CDP’s rate in one of the categories, but I was hoping to see if you can explore a little bit of the CDPs on the laundry side.

Andrea Teixeira: Thank you, operator. Hi, everyone. I just wanted to go back to what you mentioned about TDPs rate in one of the categories. I was hoping to see if you can explore a little bit of the TDPs on the laundry side, and how we're cycling that. You did say that you're not engaging your promo levels are below. Just curious, and you're still getting share. Just curious to see the volume, if you think about volume share, if you can talk about that, and as well as how to think about TDPs for laundry in general in the US for the remainder of the year. When you're cycling that, do you see that cycling some of the TDP growth into next year, or you're cycling some of it like in Q3? Thank you.

Speaker #9: And how we're cycling that. And you did say that you're not engaging, your promo levels are below. Just curious—and you're still getting share.

Speaker #9: Just curious to see the volume, if you think about, like, volume share. If you can talk about that, as well as how to think about CDPs for laundry and, in general, in the US for the remainder of the year.

Speaker #9: And when you're cycling that, do you see that cycling some of the CDP growth into next year, or are you cycling some of it in the third quarter?

Speaker #9: Thank you.

Speaker #3: Yeah. So thanks, Andrea. Really remember last quarter we kind of talked about our industry leading TDP growth and it was, I want to say, around 11 or 12%.

Richard Dierker: Thanks, Andrea. Really, remember last quarter, we kind of talked about our industry-leading TDP growth, and it was, I want to say, around 11% or 12%, and most of the industry average was at 5% or 6%. We were double what most people were getting. At the time when we talked about TDP growth, I said it was very broad-based. It was across brands and across channels, and that was entirely true. I think laundry, I don't have it in front of me, but I would guess it was high single digits for Arm & Hammer. That all was kind of towards the front part of the year. It takes a while for that to reset, but that's into next year is what I would say all those TDP results help with. Okay, we'll go to the next question.

Rick Dierker: Thanks, Andrea. Really, remember last quarter, we kind of talked about our industry-leading TDP growth, and it was, I want to say, around 11% or 12%, and most of the industry average was at 5% or 6%. We were double what most people were getting. At the time when we talked about TDP growth, I said it was very broad-based. It was across brands and across channels, and that was entirely true. I think laundry, I don't have it in front of me, but I would guess it was high single digits for Arm & Hammer. That all was kind of towards the front part of the year. It takes a while for that to reset, but that's into next year is what I would say all those TDP results help with. Okay, we'll go to the next question.

Speaker #3: And most of the industry average was at 5 or 6%, so we were double what most people were getting. And at the time when we talked about TDP growth, I said it was very broad-based.

Speaker #3: It was across brands and across channels, and that was entirely true. So I think laundry—I don't have it in front of me, but I would guess it was high single digits.

Speaker #3: For Arm & Hammer, all of that activity was kind of towards the front part of the year. So it takes a while for that to reset. That's into next year is what I would say—all those TDP results help with that.

Speaker #3: Okay, we'll go to the next question.

Speaker #2: Your next question comes from the line of Edward Lewis with Brookshire. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Edward Lewis with Brookshire. Your line is open. Please go ahead.

Speaker #10: Thanks very much. Yeah, just a couple from me, please, Rick and Lee. Just on Batiste — I guess one of your power brands — it's a bit of a tricky '25 for you in the U.S.

Edward Lewis: Thanks very much. Just a couple from me, please, Rick and Lee. Just on Batiste, I guess one of your power brands. It's a bit of a tricky 2025 view in the US, and you call that strength in the International, but I just wondered how things are going in the US with Batiste. Is it a category challenge you're facing there, or is it more of a brand challenge? Then I think you went live on the ERP, didn't you, in April? I'm looking back at what sort of you talked about or on the Investor Day, talked about it being an engine of growth in the future. At least Ray did there, who implementing it. And I just wonder, Rick, the clear optimism you feel about the outlook for the business, how much does this new sort of upgraded ERP sort of feed into that optimism?

Speaker #10: And you call that strength international, but I just wondered how things are going in the U.S. for Batiste. Is it a category challenge you're facing there, or is it more of a brand challenge?

Speaker #10: And then I think you went live on the ERP, didn't you, in April? I'm looking back at what you talked about on the Investor Day—you talked about it being an engine of growth in the future, at least for the area that implemented it.

Speaker #10: And I just wonder, Rick, as you—the clear optimism you feel about the outlook for the business—how much does this new, sort of upgraded ERP, sort of feed into that optimism?

Speaker #3: Yeah. Thanks, Ed. So for Batiste, we've talked about this—it's really a tale of two cities. Batiste internationally is doing phenomenally well. It's growing double digits.

Richard Dierker: Thanks, Ed. For Batiste, we've talked about this. It's really a tale of two cities. Batiste Internationally is doing phenomenally well. It's growing double digits. It's one of the main drivers of growth behind TheraBreath and Hero, behind innovation, the right pricing strategy. Our International Batiste business is doing extremely well. Batiste in the US is growing. We're growing a little short of the category. Category grew 5.5%. We grew closer to 2% from consumption. We lost a little bit of share, 1.44%. That was closer to 4 or 5 share points in prior quarters. We were making great headway on Batiste. I've seen the inflection. I'm not worried about Batiste. We have a great set of actions that are already in market or lined up for market in late this year, early next year on sizes and offerings and price pack architecture.

Rick Dierker: Thanks, Ed. For Batiste, we've talked about this. It's really a tale of two cities. Batiste Internationally is doing phenomenally well. It's growing double digits. It's one of the main drivers of growth behind TheraBreath and Hero, behind innovation, the right pricing strategy. Our International Batiste business is doing extremely well. Batiste in the US is growing. We're growing a little short of the category. Category grew 5.5%. We grew closer to 2% from consumption. We lost a little bit of share, 1.44%. That was closer to 4 or 5 share points in prior quarters. We were making great headway on Batiste. I've seen the inflection. I'm not worried about Batiste. We have a great set of actions that are already in market or lined up for market in late this year, early next year on sizes and offerings and price pack architecture.

Speaker #3: It's one of the main drivers of growth behind TheraBreath and Hero—behind innovation, the right pricing strategy. Our international Batiste business is doing extremely well.

Speaker #3: Batiste in the U.S. is growing. We're growing a little short of the category. The category grew 5.5%. We grew closer to 2% from consumption. So we lost a little bit of share—1.4%.

Speaker #3: That was closer to 4 or 5 share points in prior quarters. We were making great headway on Batiste. I've seen the inflection. I'm not worried about Batiste.

Speaker #3: We have a great set of actions that are already in market or lined up for market in late this year, early next year—on sizes, offerings, and price pack innovation queued up.

Richard Dierker: We have some great innovation queued up, and just a lot of confidence in the Batiste brand. That's not something I really worry about long term. The ERP system, I think it's an underappreciated fact that we have a North American ERP system. As we do acquisitions, it is one of the things that enables us to do acquisitions so flawlessly and seamlessly. Just to give you a real-life example, we closed on Miss Mouth's, I think around 1 June or so, and we're going to be fully integrated by end of August. That is lightning fast, even for us. That capability is, I think, again, just a great advantage for us. Next question, please.

Rick Dierker: We have some great innovation queued up, and just a lot of confidence in the Batiste brand. That's not something I really worry about long term. The ERP system, I think it's an underappreciated fact that we have a North American ERP system. As we do acquisitions, it is one of the things that enables us to do acquisitions so flawlessly and seamlessly. Just to give you a real-life example, we closed on Miss Mouth's, I think around 1 June or so, and we're going to be fully integrated by end of August. That is lightning fast, even for us. That capability is, I think, again, just a great advantage for us. Next question, please.

Speaker #3: And just a lot of confidence in the Batiste brand, so that's not something that I really worry about long term. The ERP system—I think it's an underappreciated fact that we have a North American ERP system.

Speaker #3: And so, as we do acquisitions, it is one of the things that enables us to do acquisitions so flawlessly and seamlessly. And just to give you a real-life example, we closed on Miss Mouth's, I think around June 1st or so.

Speaker #3: And we're going to be fully integrated by the end of August. Like, that is lightning fast—even for us. And so that capability is, I think, again, just a great advantage for us.

Speaker #3: Next question, please.

Speaker #2: Your last question comes from the line of Kevin Grundy with BNP Paribas. Your line is open. Please go ahead.

Operator: Your last question comes from the line of Kevin Grundy with BNP Paribas. Your line is open. Please go ahead.

Speaker #11: Great, thanks. Morning, everyone. Two questions for me, Rick, related to the pricing environment—where it certainly seems like the cost environment and cost inflation we're seeing would justify it.

Kevin Grundy: Great. Thanks. Morning, everyone. Two questions from me, Rick, related to the pricing environment, where we certainly seem like the cost environment and cost inflation we're seeing would justify additional pricing. A lot of discussion about brand strength broadly from Church and from some of your peers, but it doesn't seem like in certain cases that the industry is looking at pricing as a lever to offset the cost inflation, where there's a clear justification for that. Like for Procter, it's a more premium portfolio than you. Clorox, sort of well-documented what's going on from a market share perspective. I'm just trying to square some of the brand strength discussion and what would certainly appear to be a clear cost justification for additional pricing in this backdrop of a softer consumer environment, particularly in household products, and some of the decisions not to take additional price.

Speaker #11: Additional pricing. So, a lot of discussion about brand strength broadly from Church, and from some of your peers. But it doesn't seem like, in certain cases, that the industry is looking at pricing as a lever to offset the cost inflation, where there's a clear justification for that.

Speaker #11: Like, for Procter, it's a more premium portfolio than yours. Clorox—sort of well-documented what's going on from a market share perspective. So I'm just trying to square some of the brand strength discussion and what would certainly appear to be a clear cost justification for additional pricing.

Speaker #11: In this backdrop of a softer consumer environment, particularly in household products, and some of the decisions not to take additional price, what's different in the current environment versus the past, where the industry seems more inclined to move on price?

Kevin Grundy: What's different in the current environment versus past, where the industry seems more inclined to move on price? Just your thoughts there, Rick, on retailers' openness for additional price in your portfolio, how you're thinking about it for Church, and what you've included in your outlook. Thank you.

Speaker #11: So, just your thoughts there, Rick, on retailers' openness for additional price in your portfolio, how you're thinking about it for Church, and what you've included in your outlook.

Speaker #11: Thank you.

Speaker #3: Yeah, thanks, Kevin. My answer doesn't really change a lot from what I talked about last quarter, and I think in this environment, consumers are pressed.

Richard Dierker: Yeah. Thanks, Kevin. My answer doesn't really change a lot from what I talked about last quarter. I think, in this environment, consumers are pressed, and we see that. When you see stuff go on promotion, I would tell you elasticities are higher than they normally would be. Consumers are pressed, our job is to help offset that as best we can. We said last quarter we were going to do that with productivity, we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that and this inflationary environment stays higher for longer, then we would look at pricing eventually, and that's still true. We believe, we hope, that this higher inflation environment isn't permanent. Meanwhile, we're fighting it with productivity, we're fighting it with trade and promotional optimization.

Rick Dierker: Yeah. Thanks, Kevin. My answer doesn't really change a lot from what I talked about last quarter. I think, in this environment, consumers are pressed, and we see that. When you see stuff go on promotion, I would tell you elasticities are higher than they normally would be. Consumers are pressed, our job is to help offset that as best we can. We said last quarter we were going to do that with productivity, we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that and this inflationary environment stays higher for longer, then we would look at pricing eventually, and that's still true. We believe, we hope, that this higher inflation environment isn't permanent. Meanwhile, we're fighting it with productivity, we're fighting it with trade and promotional optimization.

Speaker #3: And we see that. Like, when you see stuff go on promotion, I would tell you less if these are higher than they normally would be.

Speaker #3: So, consumers are pressed, and our job is to help offset that as best we can. We said last quarter we were going to do that with productivity.

Speaker #3: And we were fighting hard to do that, and we've largely done that, which is great. We said that if we couldn't do that and this inflationary environment stays higher for longer, then we would look at pricing eventually.

Speaker #3: And that's still true. We believe—we hope—that this higher inflation environment isn't permanent. But meanwhile, we're fighting it with productivity. We're fighting it with trade and promotional optimization.

Speaker #3: And so far, we're winning. I mean, look at our gross margin expansion as an example. I think a lot of our peer groups are going backwards on margin.

Richard Dierker: So far, we're winning. Look at our gross margin expansion as an example. I think a lot of our peer groups are going backwards on margin. For a long time, typically what you see is when inflation happens, promotional levels abate as a first step. That's not what's happening right now. Like I said before, I believe that a lot of tariff rebates are happening from retailers and to other manufacturers, and they're competing that away a bit. That has to play out a bit, Kevin, is my short answer to you, but we're in a great position to win either way.

Rick Dierker: So far, we're winning. Look at our gross margin expansion as an example. I think a lot of our peer groups are going backwards on margin. For a long time, typically what you see is when inflation happens, promotional levels abate as a first step. That's not what's happening right now. Like I said before, I believe that a lot of tariff rebates are happening from retailers and to other manufacturers, and they're competing that away a bit. That has to play out a bit, Kevin, is my short answer to you, but we're in a great position to win either way.

Speaker #3: So, for a long time, typically what you see is when inflation happens, promotional levels abate as a first step. That's not what's happening right now.

Speaker #3: Like I said before, I believe that a lot of tariff rebates are happening, from retailers and to other manufacturers. And they're competing that way a bit.

Speaker #3: So that has to play out a bit, Kevin, is my short answer to you. But we're in a great position to win either way.

Speaker #11: Okay. Thank you.

Kevin Grundy: Okay. Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Mr. Richard Dierker for closing remarks.

Speaker #2: There are no further questions at this time. I will now turn the call back to Mr. Rick Dierker for closing remarks.

Speaker #3: Okay, thanks, everyone. Looking forward to talking again in the third quarter. In the meantime, have a great rest of the summer. Bye.

Richard Dierker: Okay. Thanks, everyone. Looking forward to talking again in Q3. Meanwhile, have a great rest of the summer. Bye.

Rick Dierker: Okay. Thanks, everyone. Looking forward to talking again in Q3. Meanwhile, have a great rest of the summer. Bye.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q2 2026 Church & Dwight Co Inc Earnings Call

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